UNITED STATES OF AMERICA BEFORE FEDERAL TRADE COMMISSION · PDF fileUNITED STATES OF AMERICA BEFORE FEDERAL TRADE COMMISSION ... violation of the Decision and ... relating to customers

UNITED STATES OF AMERICABEFORE FEDERAL TRADE COMMISSION

COMMISSIONERS: Timothy J. Muris, ChairmanSheila F. AnthonyMozelle W. ThompsonOrson SwindleThomas B. Leary

In the Matter of

MSC.SOFTWARE CORPORATION, a corporation.

Docket. No. 9299

AGREEMENT CONTAININGCONSENT ORDER

This Agreement Containing Consent Order (“Consent Agreement”), by and betweenMSC.Software Corporation (“Respondent”), by its duly authorized officer and attorneys, and counselfor the Federal Trade Commission ("Commission"), is entered into in accordance with theCommission’s Rules governing consent order procedures. In accordance therewith the parties herebyagree that:

1. Respondent MSC.Software Corporation is a corporation organized, existing, and doing businessunder and by virtue of the laws of the State of Delaware, with its principal place of businesslocated at 2 MacArthur Place, Santa Ana, California 92707.

2. Respondent has been served with a copy of the Complaint issued by the Commission charging itwith violations of Section 5 of the Federal Trade Commission Act, as amended, and Section 7 ofthe Clayton Act, as amended, and has filed its Answer to the Complaint denying those charges andasserting affirmative defenses but admitting the jurisdictional facts set forth therein.

3. Respondent admits all the jurisdictional facts set forth in the Complaint.

4. Respondent waives:

a. any further procedural steps;

Agreement Containing Consent Order Page 2

b. the requirement that the Commission's Decision and Order ("Decision and Order"), attachedhereto and made a part hereof, contain a statement of findings of fact and conclusions of law;

c. all rights to seek judicial review or otherwise challenge or contest the validity of the Decisionand Order entered pursuant to this Consent Agreement; and

d. any claim under the Equal Access to Justice Act.

5. This Consent Agreement shall not become part of the public record of the proceeding unless anduntil it is accepted by the Commission. If this Consent Agreement is accepted by the Commission,it will be placed on the public record for a period of thirty (30) days and information in respectthereto publicly released. The Commission thereafter may either withdraw its acceptance of thisConsent Agreement and so notify Respondent, in which event it will take such action as it mayconsider appropriate, or issue and serve its Decision and Order in disposition of the proceeding.

6. This Consent Agreement is for settlement purposes only and does not constitute an admission byRespondent that the law has been violated as alleged in the Complaint, or that the facts as allegedin the Complaint, other than jurisdictional facts, are true.

7. This Consent Agreement contemplates that, if it is accepted by the Commission, and if suchacceptance is not subsequently withdrawn by the Commission pursuant to the provisions ofCommission Rule 3.25(f), 16 C.F.R. § 3.25(f), the Commission may, without further notice toRespondent: (1) issue its Decision and Order, and (2) make information public with respectthereto. When final, the Order shall have the same force and effect, and may be altered, modifiedor set aside in the same manner and within the same time provided by statute for Commissionorders. The Decision and Order shall become final upon service. Delivery of the Decision andOrder to Respondent by any means specified in Commission Rule 4.4(a), 16 C.F.R. § 4.4.(a),shall constitute service. Respondent waives any right it may have to any other manner of service. The Complaint may be used in construing the terms of the Order, and no agreement,understanding, representation, or interpretation not contained in the Decision and Order or theConsent Agreement may be used to vary or contradict the terms of the Order.

8. By signing this Consent Agreement, Respondent represents and warrants that it can accomplish thefull relief contemplated by the Consent Agreement and the attached Decision and Order, and thatall parents, subsidiaries, affiliates, and successors necessary to effectuate the full reliefcontemplated by this Consent Agreement are bound thereby as if they had signed this ConsentAgreement and were made parties to this proceeding and to the Decision and Order.

9. Respondent has read the Decision and Order contemplated hereby. Respondent understands thatonce the Decision and Order has been issued, it will be required to file one or more compliancereports showing that it has fully complied with the Decision and Order. Respondent agrees to


comply with the Decision and Order from the date it signs this Consent Agreement. Respondentfurther understands that it may be liable for civil penalties in the amount provided by law for eachviolation of the Decision and Order after it becomes final.

MSC.SOFTWARE CORPORATION

By: Frank Perna, Jr.Chief Executive Officer and ChairmanMSC.Software CorporationDated: , 2002

Kirkland & EllisCounsel for MSC.Software CorporationDated: , 2002

FEDERAL TRADE COMMISSION

P. Abbott McCartneyPeggy D. BayerMichael G. CowieKent E. CoxAndrew J. HeimertKaren A. MillsNancy ParkAttorneysBureau of Competition

Patrick J. RoachDeputy Assistant DirectorBureau of Competition

Richard B. DagenAssistant DirectorBureau of Competition

Susan A. CreightonDeputy DirectorBureau of Competition


Joseph J. SimonsDirectorBureau of Competition

UNITED STATES OF AMERICABEFORE FEDERAL TRADE COMMISSION

COMMISSIONERS: Timothy J. Muris, ChairmanSheila F. AnthonyMozelle W. ThompsonOrson SwindleThomas B. Leary

In the Matter of

MSC.SOFTWARE CORPORATION, a corporation.

Dkt. No. 9299

DECISION AND ORDER

The Federal Trade Commission (“Commission”) having heretofore issued its complaint chargingMSC.Software Corporation (“Respondent”) with violations of Section 5 of the Federal TradeCommission Act, as amended, and Section 7 of the Clayton Act, as amended, and Respondent havingbeen served with a copy of that complaint, together with a notice of contemplated relief, andRespondent having answered the complaint denying said charges and asserting affirmative defenses butadmitting the jurisdictional allegations set forth therein; and

The Respondent, its attorneys, and counsel for the Commission having thereafter executed anagreement containing a consent order, an admission by the Respondent of all the jurisdictional facts setforth in the complaint, a statement that the signing of said agreement is for settlement purposes only anddoes not constitute an admission by Respondent that the law has been violated as alleged in suchcomplaint, or that the facts as alleged in such complaint, other than jurisdictional facts, are true andwaivers and other provisions as required by the Commission’s Rules; and

The Secretary of the Commission having thereafter withdrawn this matter from adjudication inaccordance with § 3.25(c) of its Rules; and

The Commission having thereafter considered the matter and having thereupon accepted theexecuted consent agreement and placed such agreement on the public record for a period of thirty (30)days, now in further conformity with the procedure prescribed in § 3.25(f) of its Rules, the Commissionhereby makes the following jurisdictional findings and enters the following Order:

Decision and Order Page 2

1. MSC.Software Corporation is a corporation organized, existing, and doing business under and byvirtue of the laws of the State of Delaware, with its principal place of business located at 2MacArthur Place, Santa Ana, California 92707.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of therespondent, and the proceeding is in the public interest.

ORDER

I.

IT IS ORDERED that, as used in this Order, the following definitions shall apply:

A. “Respondent” or “MSC” means MSC.Software Corporation, its directors, officers, employees,agents, representatives, predecessors, successors, and assigns; its joint ventures, subsidiaries,divisions, groups and affiliates controlled by MSC.Software Corporation, and the respectivedirectors, officers, employees, agents, representatives, successors, and assigns of each.

B. “Acquirer” means any Person that acquires the Assets To Be Divested pursuant to this Order.

C. “Acquisition of CSAR” means the transaction by which MSC acquired the right, title and interestin and to Computerized Structural Analysis and Research Corp. (“CSAR”), a Californiacorporation, and all tangible and intangible assets thereof, which occurred on or about November4, 1999.

D. “Acquisition of UAI” means the transaction by which MSC acquired the right, title and interest inand to Universal Analytics, Inc. (“UAI”), a California corporation, and all tangible and intangibleassets thereof, which occurred on or about June 24, 1999.

E. “Assets To Be Divested” means:

1. a License to the Licensed Rights;

2. such tangible embodiments of the Licensed Rights (including but not limited to physical andelectronic copies) as may be necessary or appropriate to enable the Acquirer to utilize theLicensed Rights for the purposes set forth in this Order; and

3. a copy or copies, in such form or format as may be necessary or appropriate to enable theAcquirer to utilize them, of the following:


a. all customer files acquired by MSC as a result of the Acquisition of UAI and theAcquisition of CSAR; and

b. all marketing information, sales training materials, and current (as of the Divestiture Date)customer lists, customer contact information, and customer support log database contentsrelating to customers who use MSC.Nastran in the United States.

F. “Complementary Software” means any Software intended to be used in conjunction with Nastran,including but not limited to pre- and post-processors and meshers.

G. “Commission” means the Federal Trade Commission.

H. "Divestiture Agreement" means any agreement or agreements pursuant to which Respondent or atrustee divests the Assets to Be Divested pursuant to this Order.

I. “Divestiture Date” means for each Acquirer the date on which Respondent has completeddivestiture of all the Assets To Be Divested to that Acquirer.

J. “Intellectual Property” means Software, inventions, technology, formulations, specifications,patents, patent applications, trade secrets, copyrights, know-how, research materials, technicalinformation, designs, drawings, manufacturing information, integration information, and testing andquality control data.

K. “License” means:

1. A perpetual, worldwide, royalty-free, non-exclusive license to the Acquirer (with full rightsretained by MSC) to use, market, distribute and prepare derivative works of the LicensedRights, without restriction and without further remuneration to Respondent;

2. The right of the Acquirer to assign or sub-license all or any part of its rights under the Licenseto other Persons, including but not limited to the right to sub-license as the Acquirer may see fitfor purposes of establishing a system for the sale or distribution of the Licensed Rights;

3. For a period of not less than three (3) years following the Divestiture Date, the right of theAcquirer to use the trademarks or trade names of the Licensed Rights solely for the limitedpurpose of identifying the Acquirer as a licensee of the Licensed Rights (including but notlimited to the rights to MSC.Nastran) from MSC; provided, however, that the Acquirer shallnot otherwise obtain any rights of any kind to the name “MSC” or “MSC.Nastran” or relatedlogos and trademarks of MSC; and provided further that nothing herein shall be construed tolimit to any extent the Acquirer’s use of the name “Nastran”; and


4. For a period of twelve (12) months following the Divestiture Date, the right of the Acquirer toobtain from the Respondent, upon reasonable notice and at reasonable times and levels, suchpersonnel, information, technical assistance, advice and training to the Acquirer as arenecessary or appropriate to effectuate the purposes of this Order; PROVIDED thatRespondent shall be under no obligation to provide any such personnel, information, technicalassistance, advice or training relating to the items identified in Paragraph I.L.1.b. and I.L.1.c ofthis Order. Such assistance shall include reasonable consultation with knowledgeableemployees of MSC to ensure that the personnel of the Acquirer are appropriately trained toenable the Acquirer to maintain, develop and support the Licensed Rights in a mannercomparable to MSC. Respondent shall not charge the Acquirer more than its own direct, out-of-pocket expenses of labor and travel in providing such assistance, not including overhead oradministration expenses.

L. “Licensed Rights” means:

1. the following:

a. all Intellectual Property and other property rights owned or licensed by MSC relating tothe version of MSC.Nastran that is most current as of the date the Agreement ContainingConsent Order is accepted by the Commission for public comment;

b. all Intellectual Property of any kind acquired by MSC as a result of the Acquisition ofUAI, including all rights in and to any versions of Nastran and any other computerSoftware; and

c. all Intellectual Property of any kind acquired by MSC as a result of the Acquisition ofCSAR, including all rights in and to any versions of Nastran and any other computerSoftware.

2. “Licensed Rights” includes but is not limited to, with respect to each of the enumerated itemsset forth in the foregoing Paragraph I.L.1., the following:

a. all computer code, including standard versions and user-modifiable versions, source code,object code, linear and nonlinear solution sequences, object libraries, applications,features, enhancements, optional modules, DMAP capabilities and features, programinterfaces with Complementary Software, and MSC.Nastran Tool Kits, for all operatingsystems and computer platforms;

b. all Software programs, instructions, manuals, documentation, scripts, development tools,development environments, proprietary programming languages, designs, drawings,specifications, research data, problem resolution protocols and all other Intellectual


Property used to develop, upgrade, maintain, test, enhance or add features, capabilities,elements or improvements to the licensed items;

c. all Software programs, instructions, manuals, documentation or materials of any kind usedor supplied to a user of any of the licensed items to facilitate installation or operation ofany of the licensed items, or to facilitate migration or conversion by any user to or fromany of the licensed items;

d. all executable programs, test problems, test results, regression test Software,development support Software, interfaces with Complementary Software, APIs, manuals,guides, reports, and other documentation; and

e. all other Intellectual Property and intangible property rights that may be reasonablynecessary to facilitate the use by the Acquirer of the Licensed Rights for the purposes setforth in this Order.

M. “MSC.Nastran” means the proprietary version of Nastran developed, distributed or licensed byMSC, excluding the following MSC products: MSC.Nastran for Windows, MSC.Dytran, MSCWorking Model products, MSC.FEA, MSC.AFEA, MSCAKUSMOD, MSC.Construct,MSC.Patran, MSC.SuperModel, MSC.FlightLoads, MSC.Ultima, the MSC V5i family,MSC.Fatigue and MSC.Actran.

N. “Nastran” means the finite element analysis solver software first developed by the U.S. NationalAeronautics and Space Administration (“NASA”) during the 1960's to perform structural analysisfor NASA projects, which was thereafter released by NASA into the public domain to allowbroader use and commercial development. The term includes not only the version of the Nastransoftware that NASA has placed in the public domain, but also the proprietary versions of thesoftware developed and enhanced by private parties based on the source code made available byNASA.

O. "Person" means any natural person, partnership, corporation, company, association, trust, jointventure or other business or legal entity, including any governmental agency.

P. “Pro rata portion for the remaining term of the contract or license” means the percentagecalculated by dividing the amount of time remaining on the term of a contract or license by theamount of time of the total term of that contract or license, and by converting the resulting ratio intoa percentage by multiplying by one hundred (100).

Q. “Relating to” means in whole or in part constituting, containing, concerning, discussing, describing,embodying, analyzing, identifying, or stating.


R. “Software” means any type of computer code, including, but not limited to, source code, objectcode, executable programs, software scripts, modules, add-ons, patches, library functions, objectlibraries, test programs, test results, regression test software, interfaces with ComplementarySoftware, enhancements, customizations, development tools, development environments, andproprietary programming languages.

II.

IT IS FURTHER ORDERED that:

A. No later than one hundred fifty (150) days after the date the Agreement Containing ConsentOrder is accepted for public comment by the Commission, or ninety (90) days after the date onwhich this Order becomes final, whichever date is later, Respondent shall divest absolutely, ingood faith, and in a manner that receives the prior approval of the Commission, the Assets To BeDivested to each of up to two Acquirers that receive the prior approval of the Commission.

B. If any of MSC’s rights in any of the Licensed Rights are licensed from any third party under termsthat would prevent MSC from conveying, licensing, sublicensing or assigning such rights to theAcquirer, then MSC shall obtain, no later than the Divestiture Date, the agreement of the thirdparty to the licensing of such rights to the Acquirer.

C. The purpose of the divestiture provided for in this Order is to remedy the lessening of competitionalleged in the Commission’s complaint herein by establishing one or more viable and effectivecompetitors to MSC, engaged in the sale, distribution and licensing of advanced Nastran Softwarefor use by customers, including customers in the aerospace and automotive industries, and with theability to engage in further development and enhancement of Nastran Software. In determiningwhether the licensing of more than one Acquirer may be required, or whether to approve the grantof a License to a prospective Acquirer, the Commission will consider among other things the likelyfuture capability of the prospective Acquirer or Acquirers to achieve this purpose and provideeffective price and innovation competition to MSC. The Commission will consider as well, amongother things, any provisions for the hiring by the Acquirer of personnel knowledgeable concerningthe design, development, maintenance, customer support, sales and marketing of the LicensedRights.

D. Any Divestiture Agreement entered into by MSC shall not vary or contradict, or be construed tovary or contradict, the terms of this Order, and nothing in this Order shall be construed to reduceany rights or benefits of any Acquirer or to reduce any obligations of Respondent under suchDivestiture Agreement. Any Divestiture Agreement approved by the Commission shall be deemedto be incorporated by reference into this Order and shall be deemed a part hereof, and any failure


by the Respondent to comply with any provision of such Divestiture Agreement shall constitute afailure to comply with this Order.

III.


A. At any time after the Commission issues this Order, the Commission may appoint one or moreMonitors to assure that Respondent expeditiously complies with its obligations under this Orderand the Divestiture Agreement.

B. Respondent shall consent to the following terms and conditions regarding the powers, duties,authorities and responsibilities of any Monitor appointed pursuant to Paragraph III.A.:

1. The Commission shall select the Monitor, subject to the consent of Respondent, which consentshall not be unreasonably withheld. If Respondent has not opposed, in writing, including thereasons for opposing, the selection of any proposed Monitor within ten (10) days after receiptof written notice by the staff of the Commission to Respondent of the identity of any proposedMonitor, Respondent shall be deemed to have consented to the selection of the proposedMonitor.

2. The Monitor shall have the power and authority to monitor Respondent’s compliance with theterms of this Order and the Divestiture Agreement.

3. Within ten (10) days after appointment of the Monitor, Respondent shall execute an agreementthat, subject to the prior approval of the Commission, confers on the Monitor all the rights andpowers necessary to permit the Monitor to monitor Respondent’s compliance with the termsof this Order and the Divestiture Agreement.

4. The Monitor shall serve for such time as is necessary to monitor Respondent’s compliancewith the provisions of this Order and the Divestiture Agreement.

5. The Monitor shall have full and complete access, subject to any legally recognized privilege ofRespondent, to Respondent’s personnel, books, records, documents, facilities and technicalinformation relating to any of the Assets To Be Divested, or to any other relevant information,as the Monitor may reasonably request, including, but not limited to, all documents andrecords kept in the normal course of business that relate to any matters contained in thisOrder. Respondent shall cooperate with any reasonable request of the Monitor. Respondentshall take no action to interfere with or impede the Monitor’s ability to monitor Respondent’scompliance with this Order and the Divestiture Agreement.


6. The Monitor shall serve, without bond or other security, at the expense of Respondent, onsuch reasonable and customary terms and conditions as the Commission may set. TheMonitor shall have authority to employ, at the expense of Respondent, such consultants,accountants, attorneys and other representatives and assistants as are reasonably necessary tocarry out the Monitor’s duties and responsibilities.

7. Respondent shall indemnify the Monitor and hold the Monitor harmless against any losses,claims, damages, liabilities or expenses arising out of, or in connection with, the performanceof the Monitor’s duties, including all reasonable fees of counsel and other expenses incurred inconnection with the preparations for, or defense of, any claim whether or not resulting in anyliability, except to the extent that such losses, claims, damages, liabilities, or expenses resultfrom misfeasance, gross negligence, willful or wanton acts, or bad faith by the Monitor.

8. If the Commission determines that the Monitor has ceased to act or failed to act diligently, theCommission may appoint a substitute Monitor in the same manner as provided in ParagraphIII.A. of this Order.

9. The Commission may on its own initiative or at the request of the Monitor issue such additionalorders or directions as may be necessary or appropriate to assure compliance with therequirements of this Order and the Divestiture Agreement.

10. The Monitor shall report in writing to the Commission concerning compliance by Respondentwith the requirements of this Order and the Divestiture Agreement within twenty (20) daysfrom the date of appointment and every thirty (30) days thereafter until the end of his term.

11. Respondent may require the Monitor to sign a customary confidentiality agreement; provided,however, such agreement shall not restrict the Monitor from providing any information to theCommission.

12. Any Monitor appointed pursuant to Paragraph III.A. of this Order may be the same Personappointed as trustee pursuant to Paragraph IV.A. of this Order.

IV.


A. If Respondent has not divested, absolutely and in good faith and with the Commission's priorapproval, the Assets To Be Divested within the time and in the manner required by Paragraph II ofthis Order, the Commission may appoint a trustee to accomplish the divestiture, at no minimumprice. In the event that the Commission or the Attorney General brings an action pursuant to


Section 5(l) of the Federal Trade Commission Act, 15 U.S.C. § 45(l), or any other statuteenforced by the Commission, Respondent shall consent to the appointment of a trustee in suchaction. Neither the appointment of a trustee nor a decision not to appoint a trustee under thisParagraph shall preclude the Commission or the Attorney General from seeking civil penalties orany other relief available to it, including a court-appointed trustee, pursuant to Section 5(l) of theFederal Trade Commission Act, or any other statute enforced by the Commission, for any failureby Respondent to comply with this Order.

B. If a trustee is appointed by the Commission or a court pursuant to Paragraph IV.A. of this Order,Respondent shall consent to the following terms and conditions regarding the trustee's powers,duties, authority, and responsibilities:

1. The Commission shall select the trustee, subject to the consent of Respondent, which consentshall not be unreasonably withheld. The trustee shall be a Person with experience andexpertise in acquisitions and divestitures. If Respondent has not opposed, in writing, includingthe reasons for opposing, the selection of any proposed trustee within ten (10) days afterreceipt of written notice by the staff of the Commission to Respondent of the identity of anyproposed trustee, Respondent shall be deemed to have consented to the selection of theproposed trustee.

2. Subject to the prior approval of the Commission, the trustee shall have the exclusive powerand authority to divest the Assets To Be Divested.

3. Within ten (10) days after appointment of the trustee, Respondent shall execute a trustagreement that, subject to the prior approval of the Commission and, in the case of a court-appointed trustee, of the court, transfers to the trustee all rights and powers necessary topermit the trustee to effect each divestiture required by this Order.

4. The trustee shall have twelve (12) months from the date the Commission or court approves thetrust agreement described in Paragraph IV.B.3. to accomplish the divestitures. If, however, atthe end of the twelve-month period, the trustee has submitted a plan of divestiture or believesthat divestiture can be achieved within a reasonable time, the divestiture period may beextended by the Commission, or, in the case of a court-appointed trustee, by the court;provided, however, the Commission may extend the period for no more than two (2)additional periods of twelve (12) months each.

5. The trustee shall have full and complete access to the personnel, books, records, and facilitiesrelated to the Assets To Be Divested or to any other relevant information, as the trustee mayrequest. Respondent shall develop such financial or other information as such trustee mayreasonably request and shall cooperate with the trustee. Respondent shall take no action tointerfere with or impede the trustee's accomplishment of the divestitures. Any delays in


divestiture caused by Respondent shall extend the time for divestiture under this Paragraph inan amount equal to the delay, as determined by the Commission or, for a court-appointedtrustee, by the court.

6. The trustee shall use his or her best efforts to negotiate the most favorable price and termsavailable in each contract that is submitted to the Commission, subject to Respondent’sabsolute and unconditional obligation to divest expeditiously at no minimum price. Thedivestitures shall be made only in a manner that receives the prior approval of the Commission,and only to an acquirer that receives the prior approval of the Commission. Provided,however, if the trustee receives bona fide offers for an asset to be divested from more than oneacquiring entity, and if the Commission determines to approve more than one such acquiringentity and to allow the Respondent to choose from among them, then the trustee shall divestsuch asset to the acquiring entity or entities selected by Respondent from among thoseapproved by the Commission; provided further, however, that Respondent shall select suchentity within five (5) days of receiving notification of the Commission’s approval.

7. The trustee shall serve, without bond or other security, at the cost and expense of Respondent,on such reasonable and customary terms and conditions as the Commission or a court mayset. The trustee shall have the authority to employ, at the cost and expense of Respondent,such consultants, accountants, attorneys, investment bankers, business brokers, appraisers,and other representatives and assistants as are necessary to carry out the trustee's duties andresponsibilities. The trustee shall account for all monies derived from the divestitures and allexpenses incurred. After approval by the Commission and, in the case of a court-appointedtrustee, by the court, of the account of the trustee, including fees for his or her services, allremaining monies shall be paid at the direction of Respondent, and the trustee's power shall beterminated. The trustee's compensation shall be based at least in significant part on acommission arrangement contingent on the trustee's divesting the Assets To Be Divested.

8. Respondent shall indemnify the trustee and hold the trustee harmless against any losses, claims,damages, liabilities, or expenses arising out of, or in connection with, the performance of thetrustee's duties, including all reasonable fees of counsel and other expenses incurred inconnection with the preparation for or defense of any claim, whether or not resulting in anyliability, except to the extent that such losses, claims, damages, liabilities, or expenses resultfrom misfeasance, gross negligence, willful or wanton acts, or bad faith by the trustee.

9. If the trustee ceases to act or fails to act diligently, a substitute trustee shall be appointed in thesame manner as provided in Paragraph IV.A. of this Order.

10. The Commission or, in the case of a court-appointed trustee, the court, may on its owninitiative or at the request of the trustee issue such additional orders or directions as may benecessary or appropriate to accomplish divestitures required by this Order.


11. The trustee shall have no obligation or authority to operate or maintain the Assets To BeDivested.

12. The trustee shall report in writing to the Commission every sixty (60) days concerning thetrustee's efforts to accomplish the divestitures required by this Order.

V.


A. No later than one week after the execution of a Divestiture Agreement, Respondent shall providethe proposed Acquirer with the following lists, stating each individual’s name, position, businessaddress and business telephone number, to the extent known by MSC:

1. a list of all non-clerical employees of MSC in the United States who are then currentlyinvolved in the design, development, maintenance or customer support of MSC.Nastran;

2. to the extent permissible under applicable laws and with the permission of such individuals(which permission MSC shall in good faith seek promptly upon execution of the AgreementContaining Consent Order), a list of all former non-clerical employees of MSC in the UnitedStates who at any time since June 24, 1999, were involved in the design, development,maintenance, customer support, sales or marketing of MSC.Nastran; and

3. to the extent permissible under applicable laws and with the permission of such individuals(which permission MSC shall in good faith seek promptly upon execution of the AgreementContaining Consent Order), a list of all former non-clerical employees of UAI or CSAR whowere employed by either of those firms at any time within two years prior to the firms’respective acquisitions by MSC.

B. Respondent shall make available to any proposed Acquirer, for inspection, the personnel files andother documentation relating to the individuals identified pursuant to this Paragraph to the extentpermissible under applicable laws and with the permission of such individuals (which permissionMSC shall in good faith seek promptly upon execution of the Agreement Containing ConsentOrder).

C. Until six (6) months following the Divestiture Date:

1. Respondent shall provide the Acquirer with an opportunity to interview such individualsidentified pursuant to this Paragraph and negotiate employment with any of them;


2. Respondent shall not prevent, prohibit or restrict or threaten to prevent, prohibit or restrict anyPerson who was employed by Respondent from working for the Acquirer and shall cooperatewith the Acquirer in effecting transfer to the Acquirer of any such employee who chooses totransfer to the Acquirer;

3. Respondent shall not offer any incentive to any employees to decline employment with theAcquirer or to accept other employment by MSC; shall eliminate any non-compete restrictionsthat would otherwise prevent employment of such employees by the Acquirer; and shalleliminate any confidentiality restrictions that would prevent employees who accept employmentwith the Acquirer from using or transferring to the Acquirer any information or IntellectualProperty that is in the employee’s memory or that is part of the Licensed Rights. Respondentshall pay, for the benefit of any employees transferring to the Acquirer, all accrued bonuses,vested pensions and other accrued benefits.

PROVIDED, HOWEVER, that MSC is entitled as provided by contract, statutory law orcommon law to seek damages from the Acquirer and/or the former MSC employee(s) fordamages incurred as a result of the transfer of MSC’s Intellectual Property other than theIntellectual Property that is part of the Licensed Rights; and further

PROVIDED, HOWEVER, nothing in this Paragraph shall restrict Respondent from protectingor asserting in good faith Respondent’s attorney client or work product privileges.

D. For a period of one (1) year commencing on the date of any individual’s employment by theAcquirer pursuant to this Paragraph V, Respondent shall not offer employment to such individual,unless such individual is no longer employed by the Acquirer.

VI.

IT IS FURTHER ORDERED that, until the divestiture of the Assets To Be Divested iscompleted, Respondent shall not cause the wasting, deterioration, or loss of the Assets To Be Divested,nor shall Respondent sell, transfer, or encumber the Assets To Be Divested.

VII.

IT IS FURTHER ORDERED that

A. Respondent shall, for a period of twelve (12) months from the Divestiture Date, allow, withoutpenalty, any customer who uses MSC.Nastran in the United States who, in the period betweenJune 24, 1999, and the first anniversary after the Divestiture Date, has converted or does convert


from an annual contract or license for MSC.Nastran (or for multiple MSC products includingMSC.Nastran) to a paid-up contract or license for MSC.Nastran (or for multiple MSC productsincluding MSC.Nastran), to terminate or rescind such contract or license in whole or in part inorder to deal with the Acquirer, including but not limited to eliminating any restrictions ordisincentives to terminating or rescinding such contracts or licenses as they relate to MSC.Nastranand otherwise refunding or returning a pro rata portion of the consideration paid in advance forMSC.Nastran under such contract or license. The existing customers affected by this provisioninclude at least those listed on Confidential Appendix B. If the contract or license is for multipleMSC products including MSC.Nastran, Respondent shall bear the burden of proof, in anyproceeding either before the Commission or in a court, to show that the consideration paid inadvance for MSC.Nastran under any such contract or license is less than the entire considerationpaid in advance under the contract or license. In the event that the customer is listed onConfidential Appendix B, the amount of the advance consideration shall be no less than shown. For those customers not listed on Confidential Appendix B, the amount of the advanceconsideration shall be the greater of that set forth in the express terms of the contract or license,or the amount determined by allocating the advance consideration using the same methodologyused to generate Confidential Appendix B. For purposes of this provision, the advanceconsideration to be refunded or returned shall be the pro rata portion for the remaining term of thecontract or license as of the time the customer elects to deal with the Acquirer, provided howeverthat for purposes of calculating such refund or return of consideration the total term of the contractor license shall be deemed to be the lesser of four (4) years or the term specified in the contract orlicense.

B. Respondent shall, within fourteen (14) days after the Divestiture Date, provide notice by first classmail to any customer of MSC described in this Paragraph of its rights as set forth in thisParagraph. Such notice shall be made by means of a letter substantially similar to Appendix A tothis Order, shall disclose the amount of advance consideration allocable to MSC.Nastran underthe customer’s contract or license, and shall make reference to and enclose a complete copy ofthe complaint and Order in this matter. Respondent shall include with any new paid up contract orlicense for MSC.Nastran (or for multiple MSC products including MSC.Nastran) that results froma conversion as described in the preceding Subparagraph A a provision embodying the rights setforth in this Paragraph.

VIII.

IT IS FURTHER ORDERED, for a period of three (3) years following the Divestiture Date:

A. Respondent shall maintain the interoperability of the current and any future versions of MSC’sComplementary Software (including but not limited to MSC.Patran) with the Licensed Rights.


B. Respondent shall not restrict, preclude, or influence a supplier of Complementary Software orservices from dealing with the Acquirer or from supporting interoperability with any of theLicensed Rights.

C. Respondent shall maintain all current input and output file formats for MSC.Nastran so that usersof MSC.Nastran would not be impeded or penalized in their use of models, files, orComplementary Software if they switched to the version of Nastran offered by the Acquirer.

D. Respondent shall not refuse to deal with any customer or prospective customer for the reason, inwhole or in part, that such customer or prospective customer deals with the Acquirer.

IX.

IT IS FURTHER ORDERED that, for a period of ten (10) years from the date this Orderbecomes final, Respondent shall not, without prior notification to the Commission, directly or indirectlyacquire any stock, share capital, equity, or other interest in any Person engaged in the development ofany version of Nastran, or in any Person engaged in, or in any assets used in, the sales, distribution orlicensing of Nastran; provided that no such prior notification is required with respect to any Person orassets whose relationship to Nastran is limited to the reselling or distribution of Nastran on behalf ofanother Person or Persons. Such prior notification shall be given on the Notification and Report Formset forth in the Appendix to Part 803 of Title 16 of the Code of Federal Regulations as amended, andshall be prepared and transmitted in accordance with the requirements of Part 803, except for thefollowing: no filing fee will be required for any such notification; notification shall be filed with theSecretary of the Commission; notification need not be made to the United States Department of Justice;and notification is required only of Respondent. Respondent shall provide such notification to theCommission at least thirty days prior to consummating any such transaction (hereinafter referred to asthe "first waiting period"). If, within the first waiting period, representatives of the Commission make awritten request for additional information (within the meaning of 16 C.F.R. § 803.20), Respondent shallnot consummate the transaction until thirty days after substantially complying with such request foradditional information. Early termination of the waiting periods in this Paragraph may be requested and,where appropriate, granted by letter from the Bureau of Competition. Provided, however, that priornotification shall not be required by this Paragraph for a transaction for which notification is required tobe made, and has been made, pursuant to Section 7A of the Clayton Act, 15 U.S.C. 18a, and thatnothing in this Order shall be construed to relieve Respondent of its obligation to comply with anynotification requirement of that statute.


X.


A. Within sixty (60) days after the date this Order becomes final and every sixty (60) days thereafteruntil it has fully complied with its obligations under Paragraphs II, IV, V, VI, and VII.B. of thisOrder, Respondent shall submit to the Commission a verified written report setting forth in detailthe manner and form in which it intends to comply, is complying, and has complied withParagraphs II, IV, V, VI, VII.A., and VII.B of this Order. Respondent shall include in suchcompliance reports, among other things that are required from time to time, a full description of theefforts being made to comply with the Order, including a description of all substantive contacts ornegotiations for the divestiture and the identity of all parties contacted. Respondent shall include inits compliance reports copies of all written communications to and from such parties, all internalmemoranda, and all reports and recommendations concerning divestiture.

B. Within six (6) months after the date this Order becomes final and every six (6) months thereafteruntil it has fully complied with its obligations under Paragraph VII.A. of this Order, Respondentshall submit to the Commission a verified written report setting forth in detail the manner and formin which it has complied and is complying with Paragraph VII.A. of this Order.

C. One (1) year from the date this Order becomes final, annually for the next nine (9) years on theanniversary of the date this Order becomes final, and at such other times as the Commission mayrequire, Respondent shall file a verified written report with the Commission setting forth in detailthe manner and form in which it has complied and is complying with this Order.

XI.

IT IS FURTHER ORDERED that Respondent shall notify the Commission at least thirty(30) days prior to any proposed change in Respondent, such as dissolution, assignment, sale resulting inthe emergence of a successor corporation, or the creation or dissolution of subsidiaries or any otherchange in the corporation that may affect compliance obligations arising out of this Order.

XII.

IT IS FURTHER ORDERED that, for the purpose of determining or securing compliancewith this Order, upon written request, Respondent shall permit any duly authorized representative of theCommission:

A. Access, during office hours and in the presence of counsel, to all facilities and access to inspectand copy all books, ledgers, accounts, correspondence, memoranda and other records and


documents in the possession or under the control of Respondent relating to any matters containedin this Order; and

B. Upon five (5) days’ notice to Respondent and without restraint or interference from it, to interviewofficers, directors, employees, independent contractors, or agents of Respondent, who may havecounsel present, relating to any matters contained in this Order.

XIII.

IT IS FURTHER ORDERED that this Order will terminate ten (10) years after the date itbecomes final.

By the Commission.

Donald S. ClarkSecretary

SEAL:

ISSUED:

Appendix A

[MSC.Software Corporation letterhead]

[date]

[Name of customer]Attention:[name of contact person at customer][Address of contact person at customer][telephone number of contact person]

Dear [contact person]:

This is to inform you that, pursuant to an order of the Federal Trade Commission,MSC.Software Corporation (“MSC”) is required to allow certain of its customers under a contract orlicense for a term longer than one year for MSC.Nastran, or for multiple MSC products includingMSC.Nastran, to terminate or rescind such contract or license in whole or in part in order to deal with[Acquirer]. Accordingly, if and when you license a version of Nastran from [Acquirer], you have a rightto terminate your contract or currently existing amendments to your contract as it relates toMSC.Nastran regardless of the termination date specified in that contract or amendment. There will beno charge or other fee in connection with this early termination. In addition, MSC may be required torefund or return a pro rata portion of the consideration paid in advance for MSC.Nastran under yourcontract or license. The amount of advance consideration allocable to MSC.Nastran under thecustomer’s contract or license is $ ______.

A copy of the Federal Trade Commission’s complaint and final order in this matter is attached. If you have any questions concerning the implementation of the provisions of the FTC’s Order, youmay wish to contact [Name of Monitor], who has been named Monitor under the terms of the Order.

Sincerely,

[President of MSC.Software Corporation]President MSC.Software Corporation

APPENDIX B

CONFIDENTIAL

[LIST OF AFFECTED CUSTOMERS]

Documents

UNITED STATES OF AMERICA BEFORE FEDERAL TRADE COMMISSION · PDF fileUNITED STATES OF AMERICA BEFORE FEDERAL TRADE COMMISSION ... violation of the Decision and ... relating to customers